Un-Merger?

Date 2001/1/15 0:00:00 | Topic: Miscellaneous

Our friend over at All Fours Jeep Club sent us a link to a very interesting article in the British newspaper, The Sunday Times. It seems that there is a rumor going around throughout the automotive industry the the merger between Daimler and Chrysler might be headed in the opposite direction...

The world's third-largest car group, DaimlerChrysler, is likely to be broken up as pressure grows on Jürgen Schrempp, its chairman, to revive its fortunes.

General Motors is ready to bid for Mercedes-Benz, the most valuable part of the American-German firm.

The Sunday Times has learnt that the company's leading shareholders have given Schrempp what is effectively a stay of execution. Deutsche Bank, the largest shareholder with 12% of the shares, and the Kuwait Investment Office, which holds 7%, are losing patience with Schrempp, who has presided over a collapse in the share price and has failed to convince observers that he is tackling the problems at the Chrysler arm.

One person familiar with the situation said Schrempp has six months to show he can turn round Chrysler's fortunes or face a break-up of the group, which merged less than three years ago. Mercedes, the other main arm of the business, has shown strong growth.

Analysts believe any break- up would initially involve Daimler splitting from Chrysler, almost as if the 1998 merger had not happened.

Rumours of a break-up have caught the attention of some of the world's leading motor executives, including those at Ford, GM, Honda and Volkswagen. One executive at GM said Schrempp's departure would inevitably lead to a number of groups attempting to cherry-pick DaimlerChrysler's best assets, including Mercedes and Jeep.

While a full takeover bid would face considerable regulatory obstacles, a break-up of the group does appear to be uppermost in the minds of its biggest shareholders.

Anyone with an interest in the long-term future of the Jeep should check out the entire article.